funding your business 37 M&A finance to increase in 2015
The Loan Market Association has undertaken a survey of its members’ views on the outlook for the loan market in 2015. John Chater of Penningtons Manches LLP considers the results
The findings can broadly be summarised as renewed (or continuing – depending on your view) optimism in the market, with the best opportunities arising from M&A and with non- bank finance forecast to increase. Although the survey relates to the syndicated loan market, the responses to three key questions may be mirrored in the bilateral market.
The most interesting question the survey asked was: Next year (meaning 2015), where do you think the best opportunities will lie in the loan market? The responses reveal it is anticipated that the best opportunities will be financing corporate M&A. Of the respondents, 33.5% predicted corporate M&A will be the best opportunity. This marks a key change from the
Enterprise Investment Scheme (EIS): Why invest?
EIS investments have risen to prominence since the Government increased the rate of income tax relief from 20 to 30%, and the annual EIS investment limit.
EIS investments are a tax-efficient way to invest in the new shares of small businesses, as well as giving much needed capital to growing companies. The schemes offer investors significant benefits: 30% income tax relief on the investment and the return within the EIS is free from capital gains tax. The minimum holding period is three years. There are several ways to invest, either in single companies or via a fund.
The tax incentives, together with the availability of loss relief and rolling over capital gains, makes investing in EIS qualifying companies attractive in that the tax breaks potentially mitigate the higher level of investment risk.
Rebecca Constable, director, private banking
EIS investments can also form part of an estate planning strategy. Investments can qualify for Business Property Relief (BPR) after two years meaning they are free from inheritance tax (IHT).
All information is based on current tax legislation, which can change. SGPB Hambros Group does not provide tax advice. The level of taxation depends on individual circumstances and such levels and bases of taxation can change. You should seek professional advice in order to understand any applicable tax consequences.
Details: Rebecca Constable 020-7597-3290
rebecca.constable@
sghambros.com
2014 survey, where refinancings were predicted to be the best opportunities, and is reflected in the steadily-increasing amount of corporate M&A we are seeing, with lending opportunities rising as a result. It is worth noting there is still likely to be a fairly large number of corporates who will want to refinance in 2015.
Another key question the survey asked was: Which lending ’source’ do you think will demonstrate the greatest growth in real estate lending in 2015? Non-bank lending is expected to show the greatest growth this year. Of the respondents, 32.4% predict debt funds will be the source of the greatest growth, while others predict the source of the greatest growth will be banks (21.0%), pension funds (19.9%), insurers (15.5%),
sovereign wealth funds (8.2%) and other sources (3.0%).
The findings perhaps reflect increased competition and diversification in the real estate lending market, as well as renewed optimism in property as an investment. In our opinion, the investment arms of insurance companies may well play a vital role in the commercial real estate sector, as they may look to invest more and more in what could
be viewed as reasonably safe medium/long-term investments with the potential for higher yields.
A similar question in the survey was: In five years’ time what will be the change in market share in volume terms of non-bank finance in the loan market? Most respondents predict there will be an increase in non-bank finance, with 52.8% predicting a moderate increase and 32.7% predicting a significant increase. The LMA points out that this reflects the regulatory drive to encourage the provision of credit from sources outside the banking market. However, we expect bank finance to continue to play a significant and vital role.
Details: John Chater 0118-9822640
john.chater@
penningtons.co.uk www.penningtons.co.uk
Finding funding at Altitude
Altitude Partners provides direct investment of between £500,000 and £2 million to growing businesses in the south. For companies needing financial backing and a helping hand, it not only provides investment, but also strong support to management teams in developing highly- successful businesses in their own sectors.
The challenges facing SMEs today are multi-layered, and include domestic and international strategy, recruiting the right staff resources and establishing a robust financial platform to build from. In facing these challenges, Altitude is aligned with the management teams and provides strategic input and management support through its extensive networks, to help grow the businesses.
As a result, Altitude’s investments have all seen strong growth. Altitude backs businesses which are growing organically and through acquisition, as well as supporting management teams undertaking management buyouts.
Altitude is actively seeking to invest in manufacturing, leisure, retail and
THE BUSINESS MAGAZINE – THAMES VALLEY – FEBRUARY 2015
www.businessmag.co.uk
the service sectors. It can tailor each investment differently and provide follow-on investment, which is essential for growing companies.
Simon White of Altitude said: “The southern region has a wonderfully diverse base of good businesses, but many businesses experiencing growth find themselves either undercapitalised or with the wrong shareholder base for significant expansion. A conventional blend of professional equity investment and, where appropriate bank debt, gives a strong financial base on which to expand. We have significant funds available and are always seeking to back good management teams and owners who recognise the opportunities to grow their businesses over the next few years.“
With current investments in healthcare, telephony, manufacturing and software, investments are not restricted to specific sectors.
Details: 023-8000-2030
www.altitudepartners.co.uk
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